S.Africa’s unemployment steady at 14-year high, economy in “precarious” position

PRETORIA (Reuters) – South Africa’s unemployment rate stayed at a 14-year high in the second quarter, with the statistics agency saying on Monday the country was in a “precarious position” of not creating enough jobs to make a dent in poverty.

The unemployment rate remained unchanged at 27.7 percent of the labour force in the second three months of this year, with the absolute number of unemployed down slightly to 6.177 million from 6.214 million, data from the statistics office showed.

Africa’s most industrialised economy has sunk into recession and had its credit rating downgraded to junk by two of the three main credit rating agencies. In July Stats SA said nearly a fourth of all households are in poverty.

Statistician General Pali Lehohla said the real economy, which includes mining and manufacturing, was not creating enough employment.

“We are in a very precarious position as South Africa in as far as exiting poverty. The type of strategy that can make us exit poverty is when people are working,” Lehohla said.

“This kind of poverty cannot be resolved by social grants and the like. That type pf poverty is solved if people are doing work and being productive,” Lehohla said.

Although South Africa’s economy contracted for a second successive quarter in March, economists expect positive growth in 2017, but warn that political turmoil and regulatory uncertainty will continue to hamper investor sentiment.

Chief economist for Africa at Standard Charted, Razia Khan, said agriculture and mining were the only sectors that grew meaningfully in the first quarter of this year but actually experienced job losses in the second quarter.

“With a significant uplift to growth performance unlikely to be on the horizon just yet, there is little to suggest a meaningful pick-up in job creation for some time,” she said.

The rand shrugged off the unemployment print, with market focus on the no-confidence motion against President Jacob Zuma on Tuesday. As of 0825 GMT, the rand was trading at 13.4025 per dollar, 0.13 percent firmer than its close on Friday.

Zuma faces a no-confidence vote in parliament on Tuesday brought by opposition parties. The ruling African National Congress says its members would rally behind Zuma and vote against the motion.